The only efficient markets are disciplined markets. A market that collapses because of its activity cannot be said to be efficient. The derivative markets lacked discipline in the form of proper regulation of valuation and leverage and collapsed as a result. The collapse resulted in part because of inflated valuations of assets underlying mortgage backed securities used as cash and collateral for lines of credit. The ready supply of these mortgage based derivatives and the seemingly liquid market for them led to the type of overleveraging that is the hallmark of all credit bubbles. The investment banks and AIG treated their overinflated mortgage based securities as cash, using it for collateral to justify risky behaviour. The higher the risk, the greater the return. And when everyone had faith in the value of the assets underlying the securities underlying the leveraging, all was good.
Then, lo, one day everyone discovered that they couldn't sell their mortgage based securities that they'd treated as cash because no one trusted the valuations of the mortgages underlying securities. The underlying mortgages had begun to default, and no one knew how many would default. And one of those entities that had treated its mortgage based securities as cash was AIG, which just so happened to be one of the biggest players in the credit default swap market (a market that sells default insurance). So when everyone began to default because they were overleveraged, they turned to their default insurer only to find that the insurer was overleveraged too.
Just as the securities laws of the 30's and 40's and the SEC was borne of the carnage of the Depression, a new derivative regulatory framework should rise from these ashes. To not do so would be to act foolishly in the face of clear empirical evidence that an unregulated derivative market will eventually seize up.
